Sintering of Laterite ores

Report
Confidential
GITS Sintering Services Inc.
Sintering of Laterite ores
The technology & economics of
Reduction Sintering
19th June 2010
The issue facing most Nickel Laterite
producers in the Philippines is…
How to Add Value to a large resource
of low grade laterite?
GITS
The Philippines has a large resource
base of laterite nickel…
Ore Coke Flux
GITS
The majority of nickel laterites is
exported to China for processing…
 Approx. 16Mt laterite imported into
China in 2009
 Imports are equivalent to > 110,000 t
Ni metal
 For higher grade Ni ores, Indonesian
ore is preferred over Philippine ores
 Philippine exports are mainly lower
Ni grade ores
China Laterite Imports
New Caledonia
Indonesia
3.00
2.50
2.00
1.50
1.00
0.50
A
J'10
O
J
A
J'09
O
J
A
J'08
O
J
A
J'07
O
J
A
0.00
J'06
Million Tonnes Ore
Philippines
World Nickel Laterite Resources
Asia & Europe
New Caledonia
[2559 [email protected]% Ni] 23%
Other Australasia
Australia
[2452 [email protected]% Ni]
3%2%
13%
12,622
Million
Tonnes
Africa
[996 [email protected]% Ni]
11% C & S America
[1131 [email protected]% Ni]
7%
17%
Philippines
[2189 [email protected]% Ni]
8%
16%
Carribean
[944 [email protected]% Ni]
Indonesia
4
[1576 [email protected]% Ni]
4
GITS
Direct shipping of Nickel laterite ore is
of low intrinsic value…
Ore Coke Flux
Laterite Nickel
Grade, % Ni
1.0%
1.5%
1.75%
2.0%
Chinese Purchase
Price, US$/t
US$12/t
US$20/t
US$30/t
US$50/t
>30% “water” shipped to China with every tonne exported
Vale - Goro
Xstrata - Koniambo
Heron Resources
Sherritt - Ambatovy
Gladstone Pacific
Minara - HPAL
BHPB - Raventhsorpe
Highlands Pacific & MCC
- Ramu
Nickelore - Canegrass
Electric Arc Furnace
Skye - Fenix HPAL
$40,000
Skye - Fenix
Agitation Leach Al
Coral Bay-St 2
$50,000
Metallica Minerals
Vale - Vermelho
Minara - Heap Leach
Coral Bay-St 1
BNC - HL or AL 25kt
Rusina - HL
European Nickal - Caldag
($US Capital Cost) / (t Ni pa)
GITS
Ore Coke Flux
Traditionally, value added processing
has been too expensive…
World Lateritic Nickel Operations Capital Intensity
The Y axis values are based on total nickel production - not just payable nickel amount.
$70,000
$60,000
Heap Leach HL
HPAL
$30,000
$20,000
$10,000
$0
GITS
Sintering is significantly cheaper & has
significantly lower barriers to entry
Ore Coke Flux
 Sintering is the intermediate step in producing either laterite nickel feed for an EAF/Blast Furnace [Ni PI], or
 iron ore feed for the steel industry
 Capital Costs for a sinter plant are low Approx. US$4M per 100,000 tpy production module
 Sintered products command a higher price then DSO Laterite nickel sinter @ ~1.8% Ni = US$130/t FOB
 Iron ore feed @ ~60% Fe = US$85 to US$100/t FOB
GITS
What is Reduction Sintering?
Ore Coke Flux
A process of heating laterites to 900oC – 1,200oC, under reducing
conditions, to induce a phase change of hematite to magnetite
resulting in a semi-fused metallic sinter which can be further
upgraded by simple magnetic means.
Nickel Laterites:
Upgrades Ni content in sinter product
& eliminates water
Iron Laterites:
Upgrades 40% to 50% Fe in limonite to
>60% magnetite sinter & eliminates water
GITS
Why is Reduction Sintering economic today?
Ore Coke Flux
 Historical low iron ore prices (<US$30-US$40/t @ 60% Fe) have
prevented the industry from expanding, until recently.
 As iron ore prices increase, the economics of sintering improves
 The Chinese are a ‘test-bed’ and very innovative when it comes
to seeking alternatives to high grade iron ore prices
(Nickel) Laterites
&
Processing Options
GITS
Ferronickel technologies suitable for
nickel laterite ores… [Pyrometallurgy]
Ore Coke Flux
Chinese
Blast
Furnace
Process
1% Ni to 1.5% Ni Ore  3% to 5% Ni Pig Iron
Requires high Fe laterite
Low Capital...but environmental issues
Electric
Arc
Furnace
Process
>1.5% Ni to 2% Ni Ore  5% to 15% Ni Pig Iron
Requires low Fe laterite
High electrical consumption
AlloyStream
Process
1% Ni to 3% Ni Ore  3% to 50% Ni Pig Iron
No constraints on Ni or Fe
Low electrical consumption
Untested – only ferromanganese
High
Pressure
Acid
Leach
[HPAL]
Atmospheric
Agitation
Leach
[AL]
Autoclave
High Temp
High Pressure
$$$$
Recovery > 90%
Agitation Tanks
Low Temp
Low Pressure
$$$
Recovery 70%-85%
Intermediate
Product -Ni
Hydroxide
>75% Ni Pay
GITS
Leaching technologies suitable for
nickel laterite ores… [Hydrometallurgy]
Processing
Plant – same
for all Tech.
Heap
Leach
[HL]
Low Temp
Low Pressure
$$
Recovery 60%-75%
Cathode Nickel12
100% Ni Pay
Laterite Ore Heaps
GITS
The laterite ore types will dictate the
processing routes…
Traditional
Processing
Routes
Schematic
Laterite Profile
HPAL
Limonite
Ni < 1.3%
Fe > 30%
Ferro-nickel
Saprolite
Ni > 1.8%
Fe < 20%
Bedrock
- Coral Bay
- Goro
- Revensthorpe
- Chinese Blast Furn.
- Elect Arc Furnace
- Reduction process
New
Processing
Routes
Heap
Leaching
-Turkey [ENK]
- Phil. [Rusina]
Agitation
Leaching
- Toledo Mining (TMC)
GITS
Sintering is an intermediate step in the
value-added chain… [Pyrometallurgy]
Intermediate
Products
Schematic
Laterite Profile
A
Limonite
Ni < 0.9%
Fe > 40%
B
A
Sintered Iron Ore
>60% Fe
B
BF or EAF Feed
>3% - 6% Ni PI
C
EAF Feed
>10% Ni PI
Sinter Reduction
Ni < 1.2%
Fe > 30%
C
Saprolite
Ni > 1.8%
Fe < 20%
Bedrock
GITS
Reduction Sintering is a proven technology
and is widely used around the world?
Ore Coke Flux
 Krupp Renn in Germany: 1930-1940
 Nippon Yakin in Japan: currently processing Ni laterites
 Minnesota low grade iron ores (35% Fe – 50% Fe)
 Chinese - today
GITS
Sintering is a relatively simple process
with basic inputs…
Product
GITS
Plan view and layout of a typical Reduction
Sintering plant…
Ore Coke Flux
“The Size of the Prize”
GITS
The economics of the sintering process
are compelling…
Project Life
Production Rate
Capital Cost
NPV10%
IRR %
Payback
12 Years
500,000 tpy Sinter Product
US$20 M [5 Units @ 100,000 tpy]
US$133 M [BOI Incentive]
129%
10 Months
Laterite Tonnage
Laterite Price
Plant Recovery
Electricity Consumpt.
Sinter Selling Price
Cost of Production
1.021 M wmt/year
US$12.00/wmt
90.00 %
1.71 MW/Yr [@US$0.13/kwh]
US$130 /t
US$62.96/t Sinter Product
GITS
Total cash operating costs are approx.
US63/t sinter product…
Operating Costs:
Direct Site Costs 50.21
Overhead Costs
3.00
S & Mkt Costs
0.65
Excise/Royalties 9.10
Total[/t SP] 62.96
Direct Site Costs:
Mining
24.51
Processing
21.48
Maintenance
1.60
Site Labour
2.62
Total[/t SP] 50.21
‘Margin’ over current SP of US$130/t
= ~US$67/t
Processing Costs:
Limestone
2.04
Coal
11.71
Coke
0.48
Water
0.39
Power
4.00
Fuel Oil
1.67
Beneficiation
1.20
Total[/t SP] 21.48
GITS
Annual cash flow [US$M] is healthy in
all years [500,000 tpy SP]…
P&L
US$M
Cash Flow
US$M
Gross Revenue
- Operating Costs
= EBITDA
- Deprec & Amort
= EBIT
- Income Tax
= Net Profit
Year 2
65.00
31.48
33.52
2.00
31.52
0.00
31.52
Year 7
65.00
31.48
33.52
2.00
31.52
9.46
22.06
Net Profit
+ Deprec & Amort
- Sustaining Capital
- WC Increase
= Cash Flow
31.52
2.00
5.00
0.00
28.52
22.06
2.00
5.00
0.00
19.06
Assumes BOI income tax holiday for 6 years
GITS
The modular nature of the plant allows
for financial flexibility…
NPV10%
IRR
US$M
%
1 Unit
26.62
129%
Project Life
Sinter Product
Capital Cost
Yrs
tpy
US$M
12
100,000
4.00
12
300,000
12.00
12
500,000
16.00
Laterite Feed
wmt
204,248
612,745
1,021,242
US$M
US$M
US$M
US$M
US$M
1 Unit
13.00
6.30
6.70
0.00
6.30
3 Units
39.00
18.89
20.11
0.00
18.91
5 Units
65.00
31.48
33.52
0.00
31.52
US$M
US$M
US$M
US$M
US$M
1 Unit
6.30
0.40
1.00
0.00
5.70
3 Units
18.91
1.20
3.00
0.00
17.11
5 Units
31.52
2.00
5.00
0.00
28.52
P & L [Year 2]
Gross Revenue
Op. Costs incl Depr.
EBITDA
Income Tax
Net Profit
Cash Flow [Year 2]
Net Profit
+ Depreciation
- Sustaining Capital
- WC Inc.
Cash Flow
3 Units
79.87
129%
5 Units
133.11
129%
Sensitivities indicate a robust project
is achievable…
GITS
Base Case [email protected]% = US$162M IRR=151% Payback=<1 Year
BOI Tax Regime - Non Pioneer [US$150M]
BOI Tax Regime - Pioneer [US$162M]
PEZA Tax Regime - Non-Pioneer [US$181M]
PEZA Tax Regime - Pioneer [US$183M]
Philippine Corp - Tax Regime[US$118M]
SP Selling Price [US$130/t] +/- 10%
Operating Costs +/- 10%
Discount Rate [10%] +/- 10%
Plant Recovery [90%] +/- 10%
Capital Cost [US$20M] +/- 10%
Laterite Ore Price [US$12/t] +/- 10%
Exchange Rate [45] +/- 10%
0
25
50
75
100
125
150
175
Change in NPV10% - US$m
200
225

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